Lesson To Federal Reserve: How To Really Save The Financial Companies

I don't know why the last few weeks a talk a lot about the stupidity of Federal Reserve, The Treasury department of US and Officials of Central Bank all over the world. Maybe because they are so stupid and lack of wisdom.

What have they done to save the financial institution:

1) Cut the key rate. (Especially in the US by ignoring the high inflation rate)

2)Inject liquidity into the economy (the amount of money pump is somewhere near 10 trillion maybe?)

3) Nationalize it.(we call it a "bail out" which mean buy the assets of a company that is in trouble of bankruptcy)

4)Press conference(can you count how many times Paulson, Bernanke, Jean-Claude Trichet, Hidetoshi Kamezaki or other president of central banks around the world)

5) Regulation(few months ago they came out with the so-called uptick rule for short selling activity and yesterday they said we can't short sell a financial stocks)

I have been saying a lot and i think the thing i said maybe too complicated so i'll try to say it as simple as possible. First of all, why these financial institutions get into huge trouble?

The reason: Bad investment choices, failed financial leverage management and others. SO IT MEAN THEY GOT INTO TROUBLE NOT BECAUSE OF THEIR SHARE PRICE. NO COMPANY WILL GO BANKRUPT IF THEIR STOCK PLUNGE BECAUSE SHARE PRICE ONLY INDICATE FUTURE POTENTIAL OF A COMPANY. IF A COMPANY IS HEALTHY BUT THEIR SHARE PRICE FALL, THEN THEY CAN DOES A SHARE BUY BACK!

Still the regulators tend to save these companies with liquidity and maintain their share price. Stability of the share price will never help the future performance of a company because NOW the stability is determined by federal reserve and not investors. Liquidity will be the last thing you wanna give to rubbish companies because they will waste it again. If a company worth 140 billion dollar a year ago can come all the way down to less than 10 billion dollar, you know their ability to waste money. It's like a naughty child, the last thing you wanna give to him is sweets and cookies because it never help!

So all these steps to save these financial institutions will never work simply because it are not the medicine to the disease happen to our economy. Of course no company will be in trouble if the economy itself is strong.

I have wrote over and over again how to save the economy so i am not gonna repeat that. I remember George Bush once said "god bless America". Well, if they continue to manage the economy like that, only god can save the economy, no one else can.